Economic Analysis - Forecasts Revised Down On Election Uncertainty - 02 OCT 2017

BMI View : We have revised down our forecasts for real GDP growth in Kenya over 2017 and 2018, as political uncertainty following the annulled presidential election will weigh on business sentiment. That being said, strong fundamentals will put the economy on a more robust trajectory from H218.

An uptick in political uncertainty in the wake of the Supreme Court's decision to annul the August 2017 presidential election will result in slower real GDP growth over the coming quarters. Fears of an increase in election-related violence have reportedly delayed investment decisions amongst local businesses and encouraged households to hoard cash. Although we had expected the 2017 election to pose some headwinds to Kenya's growth outlook, these have been extended further that we had anticipated following the Supreme Court's ruling that the Independent Electoral and Boundaries Commission had to hold a new vote ( see ' Annulled Results Brings Pre-Election Risks To Fore ' , September 1). We have since revised down our forecasts for real GDP growth in 2018, from 6.2% to 5.4%, as well as our 2017 projection to 4.5% from 5.2%

Tense Election Will Deter Investment

Robust Fundamentals Will Sustain Recovery Despite Political Uncertainty
Kenya - GDP, Nominal & % y-o-y
e/f = BMI estimate/forecast. Source: UN, BMI

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